Creating a Learning Infrastructure

Welch did not start as GE's chairman with the notion of creating the world's largest learning organization, nor did that accomplishment come easily or quickly. It took many years, lots of sweat and blood, and a series of courageous decisions in the intervening years. He did, however, send the right message almost from the very start: Training would be a top priority at a Welch-headed General Electric.

When Welch became chairman in 1981, he inherited a company that he felt was in dire need of a dramatic overhaul. Vowing to launch a revolution, he sold off businesses, laid off more than 100,000 workers, removed layers of management, and subjected GE's remaining businesses to new performance standards (be number one or number two in your market, or you will be fixed, closed, or sold). Here's how he summarized those early years, looking back from the vantage point of 2001:

Like most American companies, we had built a military industrial complex...we had these layers and layers and layers of bureaucracy on top of people. We had people writing reports to each other. Instead of growing, we were managing growth. I just thought that we had to get the people off the people.

Welch's leadership ideal was formed during his first days at GE, in the early 1960s, when he worked in a small lab in the plastics business. There was no bureaucracy, business was fast and exciting, and there were no management layers to clog up decision making. He believed that re-creating that small-company ideal (which he later compared to a corner grocery store) was the key to enhancing productivity and creating a learning culture in a vast bureaucracy like GE. At the corner grocery, the owner knows the customers, knows what they want, and even knows why they buy what they buy. Welch thought his mammoth corporation could, and should, move in that direction.

Many of his most important initiatives were aimed at removing roadblocks to productivity ("get the people off the people") in an effort to reach his ultimate goal: a company devoid of bureaucracy and boundaries, in which ideas and intellect would rule. But it would take years to create that model. First, he had to attend to more immediate matters.

One of those more urgent matters was getting expenses under control. Although Welch's early moves involved massive restructuring and cost cutting, he invested more than $45 million to upgrade Crotonville, GE's famed management development center on the Hudson. While many insiders second-guessed this priority, Welch was undeterred. He knew that his transformation of GE would require a home base. From that point on, Crotonville served as the focal point of his self-proclaimed revolution.

It was at Crotonville, for example, that GE trained thousands of managers in the latest company idea or initiative (such as Six Sigma, digitization, and so on). Investing in Crotonville was an important first move, but developing an authentic learning culture within such a huge corporation would require many more crucial and difficult steps.